Banks call for one year extension of ECLGS for MSMEs

New Delhi, 18 Jan (KNN) As per media reports the Indian Banks’ Association (IBA) has asked for the extension of Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs up until March 2023.

Moreover, IBA has urged to give 10 per cent facility for companies under this scheme along with the inclusion of SMA-2 (special mention accounts).

Accounts that have defaulted or are displaying repayment stress, however aren’t classified as non-performing assets (NPAs) are SMAs.

As of now, SMA-2 accounts with a duration of up to 60-90 days are excluded from the scheme.

To provide 100% guarantee coverage to Banks and NBFCs to enable them to extend emergency credit facilities to Business Enterprises / MSMEs in view of COVID-19 to meet their additional term loan/additional working capital requirements.

The scope of ECLGS has seen its expansion in 4 parts, with the latest ECLGS 4.0 introduced in May 2021.

It provides for 100 per cent collateral free guarantee to member lending institutions in respect of loans upto INR 2 crore extended to eligible hospitals/nursing homes/clinics/medical colleges / units engaged in manufacturing of liquid oxygen, oxygen cylinder etc. for setting up of on-she oxygen producing plants.